George Soros yesterday used very strong words in an interview with the German highbrow weekly, DIE ZEIT (The Times), words no government official would dare to use for it would be a break with the international rules of non-interference in other countries internal affairs. However what he said in his harsh language is exactly what Barack Obama will be preaching on this weekends G20 summit in Toronto: Germany should cut taxes and do everything to induce Germans to spend more and buy other countries products rather than continue its mean habit of sitting on a huge trade balance surplus.
However German chancellor Angela Merkel has taken a decisive stand against Barack Obama, finding herself alongside many other European heads who recognized the once in a generation opportunity to abandon Keynesian deficit spending that did them no good lately. It will be this battle between realists and denialists in relation to unsustainable spending that will occupy centre stage for the foreseeable future in the West. For example, France has not had a balanced budget in one single year of the last four decades. If it were not for the extraction of huge European funds, paid for by Germany among others, France would have long gone broke.
With the brave austerity budget in Britain and the dramatic tumbling of Kevin Rudd over a prohibitive mining tax the balance in the Anglo-sphere, which had erred for too long on the side of unlimited deficit spending, is switching back to economic realism - focussed on wealth creation after everybody seems to be “running out of other peoples money” (Thatcher). US president Obama, who was so keen to emulate the now broke European model, suddenly stands as the last European spendthrift. And he used George Soros, the same who made his billions by betting on the decline of the pound, to bully Germany back into the Keynesian fold. I wonder where Soros has put his bet in times of a much anticipated decline of the Euro. Overall Soros is a poor choice of Obama - he is probably the last person to get any sympathetic audience in Germany.